Glossary

Discover more about common terms in the cryptocurrency world


Altcoin – a cryptocurrency or a category of cryptocurrencies that are an alternative to bitcoin. Many altcoins project themselves as better alternatives to bitcoin in various ways (e.g. more efficient, less expensive, etc.).

Bitcoin – is a form of digital currency created in 2009, that is created and distributed on a peer-to-peer basis. It has no central bank - transactions are conducted directly between individuals. Bitcoin is the most popular kind of cryptocurrency.

Blockchain – is a digital file distributed to everyone participating in a cryptocurrency network. The blockchain acts as a kind of general ledger, keeping track of all the transactions that happen in the network. Everyone can look at the blockchain to see what transactions have happened on the network, and the blockchain is sealed using cryptography so that no one can tamper with it.

Block explorer – is an online tool to view all transactions, past and current, on the blockchain. They provide useful information such as network hash rate and transaction growth.

Cryptocurrency – is the broad name for digital currencies that use blockchain technology to work on a peer-to-peer basis. Cryptocurrencies don't need a bank to carry out transactions between individuals. The nature of the blockchain means that individuals can transact with each other, even if they don't trust each other. The cryptocurrency network keeps track of all the transactions and ensures that no one tries to renege on a transaction.

Fiat money - Refers to currencies that have minimal or no intrinsic value themselves (i.e. they are not backed by commodities like gold or silver) but are defined as legal tender by the government, such as paper bills and coins.

Fork – a situation where a blockchain splits into two separate chains. Forks generally happen in the crypto-world when new ‘governance rules’ are built into the blockchain’s code.

Hash – is a mathematical function that takes a file and produces a relative shortcode that can be used to identify that file. A hash has a couple of key properties:
  • It is unique. Only a particular file can produce a particular hash, and two different files will never produce the same hash.
  • It cannot be reversed. You can't work out what a file was by looking at its hash.
Hashing is used to prove that a set of data has not been tampered with. It is what makes bitcoin mining possible.

ICO  – Initial Coin Offering of new crypto coins or tokens offered to the general public in return for their fixed priced investments. It is a new way of decentralized crowdfunding.

Mining – is the act of producing units of a cryptocurrency (such as bitcoins) through some kind of effort. The effort is required so that people can't just create infinite amounts of the digital currency, which would devalue it. In bitcoin, mining requires computing power.

Private Key – is a string of data that shows you have access to bitcoins in a specific wallet. Think of a private key like a password; private keys must never be revealed to anyone but you, as they allow you to spend the bitcoins from your bitcoin wallet through a cryptographic signature.

Smart contract – acode that is deployed onto the Ethereum blockchain, often directly interacting with how money flows. A normal transaction allows you to send money from A to B. Smart contracts allow you to send money from A to B, on the condition that C happens.

Transaction Fee –All cryptocurrency transactions involve a small transaction fee. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.

Transaction ID  – alphanumeric string through which you can publicly see the transfer details (amount sent, sending/receiving bitcoin address, as well as the date of transfer) on the bitcoin blockchain

Wallet – Just like with paper dollars you hold in your physical wallet, a bitcoin wallet is a digital wallet where you can store, send, and receive bitcoins securely. There are many varieties of wallets available, whether you’re looking for a web or mobile solution. Ideally, a bitcoin wallet will give you access to your public and private keys. This means that only you have rightful access to spend these bitcoins, whenever you choose to.